Dukes v. Wal-Mart: Discussion of Rule 23(a) Factors

Having clarified, summarized, and clarified again the Rule 23 standard for class certification (discussed here), the Court next examined whether the plaintiffs met the proper standard in this case. In short, the Court held that they had and affirms class certification in part.

Rule 23(a)(1) - Numerosity: Not a real issue in this one. Slip op. at 43.

Rule 23(a)(2) - Commonality: The Court went through an extensive analysis of the evidence presented below on commonality. The Court noted that the standard is low and is construed permissively. Slip op. at 44-45. The Court then found that the district court was within its discretion to find that the plaintiffs' evidence satisfied this factor. Ibid.

The Court first examined plaintiffs' evidence that Wal-Mart had a "common policy of discrimination." The Court reviewed in detail each of the four categories of evidence presented by the plaintiffs on this point:

(1) Factual Evidence.

As factual evidence, Plaintiffs presented evidence of the following: (1) uniform personnel and management structure across stores; (2) Wal-Mart headquarters’s extensive oversight of store operations, company-wide policies governing pay and promotion decisions, and a strong, centralized corporate culture; and (3) consistent gender-related disparities in every domestic region of the company. Such evidence supports Plaintiffs’ contention that Wal-Mart operates a highly centralized company that promotes policies common to all stores and maintains a single system of oversight. Wal-Mart does not challenge this evidence.

Slip op. at 46.

(2) Expert Opinion.

Plaintiffs presented evidence from Dr. William Bielby, a sociologist, to interpret and explain the facts that suggest that Wal-Mart has and promotes a strong corporate culture — a culture that may include gender stereotyping. Dr. Bielby based his opinion on, among other things, Wal-Mart managers’ deposition testimony; organizational charts; correspondence, memos, reports, and presentations relating to personnel policy and practice, diversity, and equal employment opportunity issues; documents describing the culture and history of the company; and a large body of social science research on the impact of organizational policy and practice on workplace bias.

Slip op. at 46. After discussing Dr. Bielby's testimony at some length, the Court then turned to Wal-Mart's criticism of that testimony: that Dr. Bielby "concluded that Wal-Mart is 'vulnerable' to bias or gender stereotyping but failed to identify a specific discriminatory policy at Wal-Mart." The Court held that the district court properly rejected this criticism because the district court's role was not to determine whether Dr. Bielby was correct, but only to determine whether Dr. Bielby's testimony raised common issues sufficient to support class certification:

The court correctly explained that whether the jury was ultimately persuaded by those opinions was a question on the merits. For the class certification, however, Dr. Bielby’s opinions, for which Wal-Mart did not challenge the methodology, raised a question “of corporate uniformity and gender stereotyping that is common to all class members.” Id. We cannot say that considering Dr. Bielby’s opinions in this method was an abuse of discretion.

Slip op. at 48. The Court thus held that the district court did not err in refusing to strike Dr. Bielby's testimony under the Daubert standard. Slip op at 49.

At the class certification stage, it is enough that Dr. Bielby presented scientifically reliable evidence tending to show that a common question of fact — i.e., “Does Wal-Mart’s policy of decentralized, subjective employment decision making operate to discriminate against female employees?”— exists with respect to all members of the class.

Slip op at 50-51.

(3) Statistical Evidence.

Dr. Richard Drogin, Plaintiffs’ statistician, analyzed data at a regional level. He ran separate regression analyses for each of the forty-one regions containing Wal-Mart stores. He concluded that “there are statistically significant disparities between men and women at Wal-Mart in terms of compensation and promotions, that these disparities are wide-spread across regions, and that they can be explained only by gender discrimination.” Dukes, 222 F.R.D. at 154. Dr. Marc Bendick, Plaintiffs’ labor economics expert, conducted a “benchmarking” study comparing Wal-Mart with twenty of its competitors, concluding Wal-Mart promotes a lower percentage of women than its competitors.

Slip op. at 52-53. The Court held that the district court properly analyzed this evidence without making unnecessary and unwarranted decisions on the merits of the case:

Discussing the proper standard for evaluating the statistics, the district court said it rejected a full-blown merits evaluation of the evidence but had to “view[ ] the statistical evidence and testimony through the proper lens of the standards applicable to a class certification motion.” Dukes, 222 F.R.D. at 155. Though noting it would not decide the actual merits of the claims, the court did “delve[ ] into the substance of the expert testimony . . . to the extent necessary to determine if it [wa]s sufficiently probative of an inference of discrimination to create a common question as to the existence of a pattern and practice of gender discrimination at Wal-Mart.” Id. This is the precise inquiry that cases such as IPO have required, and it clearly meets the standard we outline above, particularly given the depth of the district court’s review, the evidentiary posture of the case as a Title VII pattern and practice case, and the underlying procedural standard where the district court here was reviewing evidence under Rule 23(a)(2), to raise a common question, rather than, like the cases Wal-Mart cites, Rule 23(b)(3), to determine predominance. See Hnot, 241 F.R.D. at 210.

Slip op. at 54. The Court noted that the district court did not "shy away" from issues that overlap with the merits, but properly examined the evidence not to the extent necessary to determine the ultimate merits of the case, but "only to the extent necessary to satisfy itself under Rule 23(a)(2) that Plaintiffs raised common questions." Slip op. at 56. The Court concluded:

Thus, because Dr. Drogin adequately explained, and the district court rigorously analyzed, why his statistical method best reflected the alleged discrimination, the court did not abuse its discretion when it credited Dr. Drogin’s analysis of statistical evidence of common discrimination questions. Nor did the district court abuse its discretion when it concluded that Dr. Drogin’s analysis supported Plaintiffs’ contention that there is a common core of facts flowing from Wal-Mart’s corporate structure and policies that affects class members generally with regard to their discrimination claims. While Plaintiffs and Wal-Mart disagree on whose findings are more persuasive, the disagreement is not one of whether Plaintiffs have asserted “common questions of law or fact.” Falcon, 457 U.S. at 157, 159. The disagreement is the common question, and deciding which side has been more persuasive is an issue for the next phase of the litigation. Requiring even more findings and further analysis from the district court would be to force a trial on the merits at the certification stage.

Slip op. at 60-61 (italics in original; underline added).

(4) Anecdotal Evidence.

Plaintiffs presented 120 declarations in which putative class members "testified to being paid less than similarly situated men, being denied or delayed in receiving promotions in a disproportionate manner when compared with similarly situated men, working in an atmosphere with a strong corporate culture of discrimination, and being subjected to various individual sexist acts. The district court credited this evidence." Slip op. at 63. The Court held that this anecdotal evidence, combined with plaintiffs' other evidence, "raise[s] an inference of common discriminatory experiences," and the district court did not abuse its discretion in considering that evidence. Slip op. at 64.

After reviewing all of the evidence on Wal-Mart's alleged "common policy of discrimination," the Court next turned its attention to "Wal-Mart’s decision to permit its managers to utilize subjectivity in interpreting [Wal-Mart's pay and promotion] policies." Slip op. at 65.

Wal-Mart is correct that discretionary decision making by itself is insufficient to meet Plaintiffs’ burden.

***

Wal-Mart is incorrect, however, that decentralized, subjective decision making cannot contribute to a common question of fact regarding the existence of discrimination. Indeed, courts from around the country have found “[a]llegations of similar discriminatory employment practices, such as the use of entirely subjective personnel processes that operate to discriminate, [sufficient to] satisfy the commonality and typicality requirements of Rule 23(a).”

***

Plaintiffs produced substantial evidence of Wal-Mart’s centralized firm-wide culture and policies, see Dukes, 222 F.R.D. at 151-54, thus providing a nexus between the subjective decision making and the considerable statistical evidence demonstrating a pattern of lower pay and fewer promotions for female employees.

Slip op. at 66. The Court concluded its commonality analysis as follows:

The district court’s analysis of Rule 23(a)(2) complies with the standard the Supreme Court has set down and we have explained today for a district court adjudicating a motion for class certification. Plaintiffs’ factual evidence, expert opinions, statistical evidence, and anecdotal evidence provide sufficient support to raise the common question whether Wal-Mart’s female employees nationwide were subjected to a single set of corporate policies (not merely a number of independent discriminatory acts) that may have worked to unlawfully discriminate against them in violation of Title VII. Evidence of Wal-Mart’s subjective decision-making policies suggests a common legal or factual question regarding whether Wal-Mart’s policies or practices are discriminatory. Many other courts have reached the same conclusion based on similar evidence.

Slip op. at 67.

Rule 23(a)(3) - Typicality:

Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). We stated in Hanlon that, “[u]nder the rule’s permissive standards, representative claims are ‘typical’ if they are reasonably coextensive with those of absent class members; they need not be substantially identical.” 150 F.3d at 1020; see also Staton, 327 F.3d at 957 (stating that “a class representative [from each job category] for each type of discrimination claim alleged . . . is not necessary”).

Slip op. at 68. The Court held that typicality was satisfied: "because the discrimination they

claim to have suffered occurred through alleged common practices—e.g., excessively subjective decision making in a corporate culture of uniformity and gender stereotyping—the district court did not abuse its discretion by finding that their claims are sufficiently typical to satisfy Rule 23(a)(3)." Ibid.

The Court also held that the class representatives are sufficiently typical of the class. The Court noted that there is no dispute that the class representatives are typical of the hourly class members, but that Wal-Mart disputes that they are typical of female in-store managers. The Court rejected this argument: "However, because all female employees faced the same alleged discrimination, the lack of a class representative for each management category does not undermine Plaintiffs’ certification goal." Slip op. at 69.

Rule 23(a)(4) - Adequacy:

The discussion here was very brief. The Court stated the rule and found that the district court did not abuse its discretion in rejecting Wal-Mart's argument that plaintiffs "cannot satisfy this factor because of a conflict of interest between female in-store managers who are both plaintiff class members and decision-making agents of Wal-Mart." Slip op. at 70.

Rule 23(a) Conclusion:

The Court thus concluded that "the district court did not abuse its discretion when it found that the Rule 23(a) elements were satisfied." Slip op. at 72.